The three major oil and gas indexes rose early Monday as TXU's buyout deal prompted talk that private equity could bring its sizable heft to other parts of the energy complex.
The Amex Oil Index (XOI :1,184.93, +5.41, +0.5% ) rose 1% to 1,191.80 points as crude for March delivery picked up 52 cents to $61.46 a barrel. The Amex Natural Gas Index (XNG : 464.88, +2.50, +0.5% ) added 0.8% to 466.10 points as natural gas fell 1% to $7.67 per million British thermal units. The Philadelphia Oil Service Index ($OSX : 203.57, +2.17, +1.1% ) rose 1.2% to 203.75 points.
TXU Corp. (TXU : 67.78, +7.76, +12.9% ) said its board has agreed to a deal to be taken private by an investor group led by Kohlberg Kravis Roberts, Texas Pacific Group and Goldman Sachs.
The deal carries a total value of $45 billion, making it the biggest leveraged buyout in history.
With all eyes on the deal, the entire energy complex stands to gains as private equity "show up to play in size," said Dan Pickering of Pickering Energy Partners in a note to clients.
"Note asset-intensive business getting love...financial players generally attracted to arbitrage possibilities around big physical assets," he said.
On the oil index, all eleven components were trading higher with BP (BP : 64.08, +0.92, +1.5% ) and Total (TOT : 70.32, +0.75, +1.1% ) leading the charge, both rising 1.6%. On Sunday, Exxon Mobil Corp. (XOM :75.44, +0.22, +0.3% ) announced it had inked an agreement with Saudi state-oil giant Saudi Aramco and China's Sinopec (SNP :85.85, +0.51, +0.6% ) to upgrade and triple the capacity of the Fujian province refinery, giving the foreign firms a key toehold into one of the fastest growing energy markets in the world. See full story.
This latest agreement, which also includes plans to build a petrochemical complex and market automotive fuels to the domestic market, signifies the first fully integrated refining and marketing joint venture project between a Chinese oil company and foreign partners.
In other international news, Malaysia's state-oil company Petronas has agreed to buy gas from three offshore fields operated by Murphy Oil Corp. (MUR : 52.67, +0.95, +1.8% ) to supply its LNG plant on Borneo, hiking Murphy's shares by 2% in early trade.
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